Singapore REIT Monthly Update (January 1st 2023) – My Stocks Investing

Happy New Year!!

FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) increased from 723.18 to 725.07 (0.26%) compared to last month’s update. The REIT Index has rebounded from the sell-off in September and October and since early November has been within the range of 714 and 742. It has been moving sideways for the past 2 months. This is a typical flag pattern after a strong move.

• Short-term direction: Sideways (20D SMA is moving sideways)
• Medium-term direction: Sideways (50D SMA is moving sideways)
• Long-term direction Down (200D SMA is sloping down)
• Immediate Support at 714
• Immediate Resistance at 742

2 years FTSE REIT Index Chart

Previous chart on FTSE ST REIT index can be found in the last post: Singapore REIT Fundamental Comparison Table on December 4th, 2022.

The following is the compilation of 38 Singapore REITs with colour-coding of the Distribution Yield, Gearing Ratio and Price to NAV Ratio.

• The Financial Ratios are based on past data and these are lagging indicators.
• This REIT table takes into account the dividend cuts due to the COVID-19 outbreak. Yield is calculated trailing twelve months (ttm), therefore REITs with delayed payouts might have lower displayed yields, thus yield displayed might be lower for more affected REITs.
• All REITs highlighted in orange are now updated with the latest Q3 2022 business updates/earnings.
• SPH Reit will be renamed to Paragon REIT from January 3rd, 2023, onwards.
• Manulife US REIT (highlighted in blue) has Gearing, Price/NAV and NAV/Unit values updated according to the recent media conference. 

Data from StocksCafe REIT Screener. https://stocks.cafe/kenny/advanced

What does each Column mean?

• FY DPU: If Green, FY DPU for the recent 4 Quarters is higher than that of the preceding 4 Quarters. If Lower, it is Red.

• Yield (ttm): Yield, calculated by DPU (trailing twelve months) and Current Price as of December 30th 2022.
  • Digital Core REIT and Daiwa House Logistics Trust: Yield calculated from trailing six months distribution, TTM yield is annualised.

• Gearing (%): Leverage Ratio.
• Price/NAV: Price to Book Value. Formula: Current Price over Net Asset Value per Unit.
• Yield Spread (%): REIT yield (ttm) reference to Gov Bond Yields. REITs trading in USD is referenced to US Gov Bond Yield, everything else is referenced to SG Gov Bond Yield.

Price/NAV Ratios Overview

• Price/NAV remained at 0.80. 
  • Remained at 0.80 since December 2022.
  • There has been a recent sell-off in September-October period.
  • Singapore Overall REIT sector is undervalued now.
  • Take note that NAV is adjusted upwards for some REITs due to pandemic recovery.

• Most overvalued REITs (based on Price/NAV)
  • Parkway Life REIT (Price/NAV = 1.58)
  • Keppel DC REIT (Price/NAV = 1.29)
  • Capitaland Ascendas REIT (Price/NAV = 1.15)
  • Mapletree Industrial Trust (Price/NAV = 1.15)
  • Mapletree Logistics Trust (Price/NAV = 1.09)
  • ESR-LOGOS REIT (Price/NAV = 1.01)
  • Only 6 REITs are overvalued now based on Price/NAV value.
  • No change in the Top 2 compared to the past 2 months.

• Most undervalued REITs (based on Price/NAV)
  • Lippo Malls Indonesia Retail Trust (Price/NAV=0.34)
  • Prime US REIT (Price/NAV = 0.47)
  • ARA US Hospitality Trust (Price/NAV = 0.49)
  • Manulife US REIT (Price/NAV = 0.55)
  • Keppel Pacific Oak US REIT (Price/NAV = 0.55)
  • EC World REIT (Price/NAV = 0.56)

Distribution Yields Overview

• TTM Distribution Yield increased to 7.90%.
  • Increased from 7.67% in December 2022.
  • 19 of 40 Singapore REITs have distribution yields of above 7%.
  • Do take note that these yield numbers are based on current prices taking into account the delayed distribution/dividend cuts due to COVID-19, and economic recovery. The recent sell-off contributed to the increase in average yield.
  • 9 REITs have a ttm yield of over 10%!

• Highest Distribution Yield REITs (ttm)
  • Manulife US REIT (17.67%)
  • Prime US REIT (17.21%)
  • Keppel Pacific Oak US REIT (13.48%)
  • United Hampshire US REIT (12.82%)
  • EC World REIT (12.74%)
  • Lippo Malls Indonesia Retail Trust (12.00%)
  • Reminder that these yield numbers are based on current prices taking into account delayed distribution/dividend cuts due to COVID-19.
  • Some REITs opted for semi-annual reporting and thus no quarterly DPU was announced.
  • A High Yield should not be the sole ratio to look for when choosing a REIT to invest in.

• Yield Spread widened to 4.69%.
  • Widened slightly from 4.61% in December 2022.

Gearing Ratios Overview

• Gearing Ratio increased to 37.20%. 
  • Increased from 37.03% from December 2022.
  • Gearing Ratios are updated quarterly. Only Manulife US REIT have an updated gearing ratio value in the past month.

• Highest Gearing Ratio REITs
  • Manulife US REIT (49.0%)
  • Lippo Malls Indonesia Retail Trust (43.7%)
  • ARA Hospitality Trust (43.3%)
  • Suntec REIT (43.1%)
  • United Hampshire US REIT (42.1%)
  • Elite Commercial REIT (41.9%)

Market Capitalisation Overview

• Total Singapore REIT Market Capitalisation increased by 0.26% to S$95.36 Billion.
  • Increased from S$95.11 Billion in December 2022.

• Biggest Market Capitalisation REITs:
  • Capitaland Integrated Commercial Trust ($13.52B)
  • Capitaland Ascendas REIT ($11.51B)
  • Mapletree Pan Asia Commercial Trust ($8.74B)
  • Mapletree Logistics Trust ($7.64B)
  • Mapletree Industrial Trust ($6.00B)
  • Frasers Logistics & Commercial Trust ($4.31B)
  • No change in the rankings since September 2022.

• Smallest Market Capitalisation REITs:
  • Lippo Malls Indonesia Retail Trust ($231M)
  • BHG Retail REIT ($257M)
  • ARA Hospitality Trust ($267M)
  • United Hampshire US REIT ($349M)
  • EC World REIT ($360M)
  • Elite Commercial REIT ($365M)
  • No change in the top 3 rankings from last 2 month’s update.

Disclaimer: The above table is best used for “screening and shortlisting only”. It is NOT for investing (Buy / Sell) decision. If you want to know more about investing in REITs, here’s a subsidised 2-day course with all you need to know about REITs and how to start investing in them.

 (Source: https://stocks.cafe/kenny/advanced)

SG 10 Year & US 10 Year Government Bond Yield

• SG 10 Year: 3.11% (increased from 3.00%)
• US 10 Year: 3.88% (increased from 3.49%)

Hong Kong’s Link Real Estate Investment Trust (REIT) enters Singapore market

CNA: Hong Kong-listed Link Real Estate Investment Trust (REIT) is buying a portfolio of Singapore shopping malls for S$2.16 billion (US$1.6 billion) from Mercatus Co-operative in its first foray into the country. The deal is for the acquisition of suburban retail assets Jurong Point and Swing By @ Thomson Plaza, along with a 10-year asset and property management service agreement for a third suburban mall, AMK Hub, which will remain under the ownership of Mercatus, Link REIT said in a stock exchange filing on Wednesday (Dec 28).

“This transaction allows us to build a dedicated team in Singapore and provides a base for Link to expand further into other asset classes and strategies in Asia Pacific,” Link CEO George Hongchoy said in a statement. Link, Asia’s biggest REIT, said it will fully fund the purchase through cash and debt, adding that it is in active discussions with investors and open to bringing in capital partners.

The announcement confirms a Reuters report in November that cited sources saying Link REIT was the frontrunner to buy the assets from Mercatus, a unit of Singapore shopping mall owner NTUC Enterprise Co-operative, in what would be Southeast Asia’s biggest real estate transaction of 2022. Read More

SPH REIT renames to Paragon REIT from January 3rd, 2023

THE BUSINESS TIMES: SPH Real Estate Investment Trust (Reit) will be renamed to Paragon Reit as the name change will better reflect the trust’s vision and mission to capture unique opportunities in the Asia-Pacific retail landscape, the Reit manager said on Thursday (Dec 29). The names of its security, counter and manager – along with the Reit’s logo and website – will reflect the new name with effect from 9 am on Jan 3, 2023. The Reit manager added that the trust will be “bolstered by the deep real estate sector knowledge and strong relationships” of its sponsor, Cuscaden Peak Investments.

Cuscaden Peak Investments was formerly known as Singapore Press Holdings, and is a wholly-owned subsidiary of Cuscaden Peak. Cuscaden Peak is a consortium comprising tycoon Ong Beng Seng’s Hotel Properties Limited, and Temasek-linked CLA Real Estate Holdings and Mapletree. The Reit’s existing counter code – “SK6U” – on the Singapore Exchange will remain unchanged.

It will also continue to be led by the current management team, retain its investment mandate, and manage its existing portfolio of assets. Read More

Fundamentally, the whole Singapore REITs landscape remains very undervalued based on the average Price/NAV (at 0.80) value of the S-REITs, which is quite rare that S-REIT is trading at such huge discount with a very attractive DPU yield of 7.90%! This is even higher than that of last month. Below is the market cap heat map for the past 1 month.

Interestingly, despite 24 REITs being bearish and only 10 REITs being bullish in the past month, market cap overall has increased very slightly by 0.26%. This is due to larger market cap REITs doing well (eg. Capitaland Ascott Trust (S$3.5B, 11.11%), ESR-LOGOS REIT (S$2.5B, 7.25%), Frasers Centrepoint Trust (S$3.6B, 3.45%). Only 3 of the bottom 12 performing REITs have market capitalisations of over S$1B. The top 5 largest Market Cap REITs have performances varying between -0.45% and -2.34%.

(Source: https://stocks.cafe/kenny/overview)